Economic Model Untenable: A. Gary Shilling

[The] "economic model, which leaves bureaucrats guessing about the market effects of their directives, is ultimately untenable." A. Gary Shilling

Sounds like Shilling is talking about our current economy in the United States, doesn't it? He's not talking about us. He's talking about China--the country whose economy is tightly intertwined with our own.

Why should you care?

While macro views of the world economy don't get you listings or buyers, it's important to stay on top of events which can affect the earning of our daily bread.

Shilling's article this morning on Bloomberg.com paints a bleak picture of China's economy headed for recession following a period of amazing growth.

Inflation is the boogyman. Imagine if you had to conduct your real estate business under the current constraints imposed by China's central government:

Want to buy a second home? Minimum downpayment: 60%.

Want to buy a primary residence? Minimum downpayment: 30%

Are you a mortgage lender? The central government sets annual limits on bank loans in advance. If your bank loans the entire amount by the end of June, you'll have to wait until January 2012 for your next loan.

Government at any time, and in any country, is an experiment. We're blessed in the United States to have a say in how our government works. Especially in these economic times, that's not a blessing to be taken lightly.

Mike - I remember Japan in the 80's and how everybody was concerned that their economy would overrun ours and the chaos would begin. Then we started to tax them like they were taxing us. The next thing you know, they were building plants in the USA and hiring american workers because it was a better business decision than paying 25 percent import taxes. When will we do the same with China and Mexico? I don't think we have a fair trade agreement with either of those countries, they tax our goods and we don't tax theirs. Seems a little unbalanced.

Our society is more interested in being entertained... <------ that's the truth. Many (way too many) have no idea what is really going on... meanwhile, China is setting up little cities right here in our country.

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